Federal Reserve chairman, Ben Bernanke said in a recent statement: “Conditions in the banking system, and the financial sector more broadly, have improved significantly in the past few years. Banks have strengthened their capital and liquidity positions. The economic recovery has facilitated the rebuilding of capital and helped improve the quality of the loans and other assets on banks’ balance sheets. Nonetheless, banks still have more to do to restore their health and adapt to the post-crisis regulatory and economic environment.”

He said mortgage lending continues to struggle because regulatory issues have not been resolved.  Mortgage credit has declined 13% from its peak as a result of lender nervousness about a variety of issues including the future of the GSEs and the absence of a strong private label mortgage securitization market.

He pointed out that the commercial lending market continues to be plagued by high vacancy rates, falling values, and troubled existing loans.

On the positive side, the 19 largest banks have proven in stress tests taken during the recovery that they have more capital and better quality assets than a few years ago.

Bernanke: Mortgage Credit Too Constricted While Other Forms of Credit Improve is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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Erkan Erturk, Standard & Poor’s senior director, structured finance reported that as of the first quarter of 2012 the average time to clear the shadow inventory of foreclosures is 46 months.  This is a one month reduction from the previous quarter.

The timeframe actually varies widely from state to state.  It will take approximately 2.5 times as long for the backlog to clear in judicial foreclosure states as in non-judicial. The average time to clear in a judicial state is now around 83 months, while the average for non-judicial foreclosure states is down to around 25 months.  The time spread between judicial and non-judicial has been dramatically diverging for the past year with non-judicial times improving and judicial clearance times getting worse. New York City leads all metropolitan areas with the longest clearance timeframe of 202 weeks.

The report measures non-GSE loans and finds the distressed mortgage total to remain extremely high at $354 billion in the first quarter.  Included in the calculation are loans 90 days or more late, and about 70% of the loans that were 90 days late but are currently viewed as “cured.”  These loans are at high risk of defaulting again.

One positive is that this distress total has been steadily falling since mid-2010. The U.S. monthly first default rate fell to 0.67% in March 2012, the lowest level since May 2007. The first default rate is the percentage of loans that became 90-plus-days delinquent in that month for the first time, as a percent of all loans that have never before been 90 days or more delinquent.

The full shadow inventory quarterly report is available for download.

Shadow Inventory Will Take 46 Months to Clear is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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The latest LPS Housing Price Index report shows that the difference in discount between foreclosure sales and Short Sales has narrowed.  Historically, there is a 10% difference or greater with foreclosure sales taking a deeper discount.  That gap is now narrowing with the average Short Sale discount of 23% as of February 2012 and the average foreclosure discount at 29%, just a 6% difference.

With the discount for Short Sales increasing now is the time for investors who have been concentrating in the foreclosure market to take another look at pre-foreclosures.  There are many advantages to getting in to the game earlier in the distress process.  Homes often continue to be lived in until the sale and the likelihood of the property falling into serious disrepair or being subjected to vandalism is less.

The same report reveals that seasonally adjusted home values increased by .2% in February.  This was the first such increase in the LPS HPI since March 2010.  LPS median prices are on par with values seen in June 2003 of $195,000.

LPS urges caution in expecting any surge in home values.  The sales volume is too anemic and increases too small to sustain much of a positive trend.

Short Sale Discounts Improve; Values Climb Slightly is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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March construction totals were up, but still at only half the levels considered healthy for the economy.  Construction spending was up .1% at a seasonally adjusted annual rate of $808.1 billion or 6% above a 12-year low of $762.6 billion reached a year ago.

The weakness was in government spending on construction which fell 1.1% to the lowest level since February 2007.  State and local construction spending fell to levels not seen since November 2006.

Private residential construction rose 0.7%. The increase was driven by more construction of single-family homes. Sales of new homes fell 7.1% in March, the largest drop in more than a year.  Though new home sales represent less than 10% of the housing market, they have an extraordinary impact on the economy. Each home built creates an average of three jobs per year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.

Building Remains Sluggish is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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While values of residential property are stagnant at best in most places rental rates continue to climb rapidly throughout the country.  According to Trulia rents rose 5.6% in April compared to the previous April.

The greatest rent growth has been experienced in communities that have seen rapid job growth such as suburban Detroit and the San Jose area of California.

This is a great sign for buy and hold investors across the country.  While people might not be able to buy homes of their own, the increase in the number of people looking for rental properties has caused rents to shoot up.  If you are able to scoop up attractive properties at or near market lows, this increase in rent is really going to help your cash flow!

If you are happy with your cash flow situation, but are carrying loans (or bought the property subject to the original loan), you could dedicate the increases in rent to paying down the principle on the loan more quickly to save yourself money in the long run.  This is an especially attractive alternative if the house has a 15 year note.  Before long you could own the property free and clear!  After that, everything above your taxes and insurance are pure profit!  Or you could just sell the property, cash out, and buy more income-generating properties.

Rents Are Climbing Fast is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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The Labor Department noted a surprisingly large drop in first time unemployment claims for the week ending April 28, as claims fell by 27,000 to 365,000. The unemployment rate dipped to 8.1, the lowest level since January 2009.

On the other hand, new payroll added included only 115,000, far below expectations and below March totals of 159,000. Both February and March totals were revised upward. Economists had expected new employment to total 165,000.

This was the 19^th straight month of job growth and the 8^th month of growth over 100,000 per month.  A total of 140,000 to 150,000 new jobs must be added each month just to keep up with population growth.

Mixed Economic News is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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Housing expert, Robert Shiller believes the global economy is mired in a “late Great Depression” despite all attempts by governments and central banks to prop up the economy.

People sort of trust their central banks, but are still frustrated by the lack of economic progress and stability.  Consumer confidence and trust in central governmental resources has been waning.  The central banks printed money “out of thin air” and now we are in a “new age of austerity.”

These pessimistic sentiments are echoed by Harvard’s economics professor, Martin Feldstein.  Feldstein sees danger on the horizon because the economy is growing “at a snail’s pace,” continuing low interest rates, and a stock market that faces a possible bubble.  What may occur is “artificial inflation” that will plunge the economy into a serious recession.

The factors that point toward trouble according to Feldstein are:

–The fiscal cliff that Europe is hanging on to.  Europe is sliding into recession and that will push U.S. exports down.

–Expect as much as $5 trillion in new taxes in 2013.

–There is a “lack of reality” in such measures as the Fed’s Operation Twist that helped the economy during Q4 of 2011 but did not have much impact past that point.  These efforts just lull the business community into a false impression that things are better than they really are.

Yale’s Shiller Sees World in “Late Great Depression” is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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The Freddie Mac index of 30 year fixed rate loans pushed to the lowest recorded rate of 3.84% for the week ending May 3, 2012, down from the previous week’s low of 3.88%.  A year ago interest rates averaged 4.71% for a 30 year fixed rate loan. The 15 year fixed rate loan stood at 3.07% compared to 3.12% a week ago and 3.89% a year ago.

The Bankrate index of large bank mortgage rates listed the average at 4.05%, down from 4.09% the previous week.  The 15 year fixed rate mortgage fell to 3.25% from 3.28% the week before.

Slowing economic indicators and continuing low inflation were credited for the record lows on mortgage rates.

Analysts do not necessarily see these low rates continuing for long.  Here are three signs that interest rates are about to rise, according to Russ Koestrerich, BlackRock/iShares chief investment strategist:

–increases in demand for capital are beginning to occur at least for businesses.  The borrowing trend, however, has not taken off yet for households, and the overall concern for inflation is still very low.

–growth is positive, but it is still weak.  As growth in GDP picks up so will inflation, and then also interest rates.

–investor appetite for risk is improving, but still cautious.  Look for what happens in Europe to indicate investor sentiment.

–deceleration in public purchases of bonds both among US government entities and foreign entities will spell higher interest rates.  Aggressive bond buying by the US and foreign governments signals low mortgage rates for now.

As these indicators begin to turn we will see marked increases in long term interest rates.

Mortgage Rates at All-Time Low; Could Increase Soon is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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An index that tracks home prices in 25 major markets shows some gains for the month ending February 16, 2012 in contrast to other housing indexes.

According to Quinn Eddins, Director of Research at Radar Logic, “The RPX methodology allows us to calculate prices daily using a sample period of 28 days as opposed to monthly using a 90-day sample period, as is the case with most other housing price indices. As a result, the month-over-month strength in the RPX reflects the fact that the housing market strengthened in February, while the decline in other indices reflects the fact that the weakness in the housing market in December and January was greater than the strength in February.”

The RPX index for February increased 22.9% for the month in terms of sales volume.  It is typical for sales to increase in February, but this February’s figures show uncommon strength, perhaps because of the good weather and the number of cash buyers in the market.  By contrast, prices fell 3.18% below February 2011 levels.

RPX analysts believe the early sales volume in 2012 will peak and will turn into weaker sales in the second half of the year.  Their predictions vary markedly from those of National Association of Realtors® analysts.

RPX Index Shows Housing Strength In Contrast to Case-Shiller Index is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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Prices may continue to fall, but, the spring buying season seems to be at hand as sales rebound briskly according to the monthly National Association of Realtors® report.  Pending sales rose 4.1% for the month and 12.8% compared to March 2011. Because first quarter existing home sales were also on track for improvement, the NAR believes the improved sales trend will continue throughout the summer selling season.

The NAR’s chief economist, Lawrence Yun, believes 2012 will be a year of recovery for the housing market.  He said, “The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions … which means home prices will be rising in more areas as the year progresses.”

Pending Home Sales Show Sharp Improvement is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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Last Tuesday home valuation expert, Robert Shiller sounded a decidedly more pessimistic note than in previous weeks.  Earlier in the spring he sounded slightly more upbeat that we may have seen the trough on home valuations.  This past week, however, he told a Reuter’s reporter that a poor labor market, high gas prices and general consumer pessimism were overwhelming all of the positive things going on in the housing market.  Low interest rates and home values cannot overcome the negatives in the economy that may prevent any significant home value increases for the foreseeable future.

The February Case-Shiller report posted another decline in both the 10- and 20-city composites at an annual rate of 3.6% and 3.5% respectively. Both composites fell by .8% over the month.  It was the sixth straight month of decline.

While the annual rate of decline is smaller on average than in the past several years, Shiller claimed that the report was a “very mixed bag.” Nine of the twenty cities continued to show declining or flat prices. Shiller particularly sounded pessimistic for recovery in suburban communities where high gas prices continue to hold down growth.  Home buyers now want to live in “walkable” cities where work and all the conveniences are within walking distance or are available with a public transit commute.

As of February average home prices across the 20-city composite list was at late 2002 levels while the 10-city composite prices compared with those in early 2003.

Only Phoenix, Miami and San Diego saw monthly price increases.  Phoenix’s values appear to be turning around with a 1.2% jump in one month and 3.3% improvement over the year.  On the other hand, Atlanta posted a 2.5% drop in value in February and a 17.3% decline year-over-year.

Home Prices May Not Rebound in Our Lifetime is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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The latest quarterly Cleveland Federal Reserve Bank Forefront report signals a caution sign to those who would be optimistic about the country’s economic recovery.

The report specifically highlights the weakened economic picture of several public entities and forecasts the dampening effect that default among some of the nation’s cities and other public entities will have on the economy as a whole.

On the positive side, the Cleveland Fed projects that pension funds commonly thought to be in trouble are actually healthier than originally thought.  While the default of major funds is not impossible, Cleveland concludes that it is unlikely.

Weakening public finances, however, does cast a cautionary note for the economy and leaves considerable uncertainty on economic recovery.

Other topics covered in the report include bank capital requirements, tax system tradeoffs, cash futures, conversion rates for home vacancies to rentals, and conversion rates for community colleges as a “bridge to business.”

Cleveland Fed’s Forefront Report Cautious About Recovery is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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RealtyTrac reports that Fannie Mae, Freddie Mac and FHA loans lead the pack for the fastest Short Sale approval timeline.  As of January 2012 the timeline for getting Short Sales accomplished was 193 days for the GSEs. In January 2011 that timeline extended to 248 days on average.

In second place for Short Sale approval speed was Ally with an average of 321 days from the time the property went into default until the Short Sale was completed.  Ally’s timeline decreased from 393 days the previous year.

Here were the results for several other lenders/servicers:  PNC Financial Group (353 days), Wells Fargo (385 days), Bank of New York Mellon (402 days), Bank of America (403 days) and Sun Trust (404 days).

Which Lenders/Servicers Process Short Sales the Fastest? is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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The RE/MAX National Housing Report for March 2012 has identified a strong surge in home values in most of the 53 markets it surveys. Median prices were up in these markets for March 2012 5.8% above values a year ago. This was the second month where values have been above those twelve months ago.

Home sales were also up 25.4% higher than in February and 1.5% higher than February 2012. This was the 9th month that the MLS data pulled from 53 markets reached higher than the same month the year before.

RE/MAX officials believe the spring and summer of 2012 will be the strongest selling seasons in years because inventory levels will be lower inducing more competition into the mix to force prices up.

The median sales price in the RE/MAX survey was $184,525, a 7.3% increase over prices in February sales and 5.8% above March 2011 sales. Of the 53 markets surveyed price increases occurred in 36 of them year-over-year and 10 markets saw double-digit increases. The top markets for price increases on an annual basis were: Detroit, MI (+22.8%), Miami, FL (up 21.8%), St. Louis, MO (18.5% increase), Phoenix, AZ (18.2% gain), Atlanta, GA (up 13.7%) and Orlando, FL (12.7% price jump).

The RE/MAX survey shows encouraging signs of housing market recovery and is generally more positive than the numbers presented in the NAR monthly index, perhaps because the RE/MAX survey is a subset of the total market.

Home Values Up in 53 Markets According to RE/MAX is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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For those of you who couldn’t make it onto last night’s business automation webinar with Zack Childress, here is a replay!  I can’t leave it up for long because of the discounted price, so hurry up and watch it!

Zack Childress Replay is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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The March Existing Home Sales report of the National Association of Realtors® shows that existing home sales fell 2.6% on the month.  The seasonally adjusted sales for March were 4.48 million compared to 4.60 in February.  It would appear that the good winter weather across much of the country siphoned sales that might have started in the spring.

The good news is that sales are 5.2% above March 2011 levels when sales were 4.26 million units.  Listed inventory declined month over month by 1.3% which is a 6.3 month supply.  Supply issues are particularly becoming a problem in parts of California and in Florida.

The March average home sale price was $163,800 which was up 2.5% from March 2011. Distressed homes represented 29% of March sales of which 18% were foreclosures and 11% were short sales.  In February distressed sales were 34% and in March 2011 they were 40%.

Home Sales Fall 2.6% in March is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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Fannie Mae and Freddie Mac have joined Bank of America in tightening timelines for lender response to homeowners on Short Sale approvals.

They will require all lenders and servicers to make the go- or no-go decision on a Short Sale within 30 to 60 days.  Now a lender can take up to 90 days to respond as long as they give weekly updates to homeowners and their agents.  Last year Fannie and Freddie did a combined 125,000 Short Sales; it will be interesting to see if that number jumps substantially in 2012.

Fannie and Freddie Set Tighter Timelines for Short Sales is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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The statistics are beginning to indicate that 2012 will be a bumper crop year for Short Sales.  RealtyTrac reports that in January pre-foreclosure sales increased by 33% compared to a year ago.  Even foreclosures are not keeping up the same pace as Short Sales.  Twelve states saw more Short Sales in January than foreclosure sales: Arizona, California, Colorado, Florida, Indiana, New Jersey, New York and Utah.

The states with the biggest annual increase in Short Sales were:  Georgia (113% increase), Michigan (up 90%), Wisconsin (77% higher), South Carolina (up 76%) and Utah (70% gain).

On average Short Sales closed with a 21% discount.  States with the highest discounts were Massachusetts (40.86%), Missouri (35.5%), California (29.93%), Indiana (29.82%), and Georgia (29.31%). The top five MSAs for Short Sale discounts were: Kansas City, MO (56.53%), Louisville/Jefferson County, KY (44.25%), Milwaukee-Waukesha-West Allis, WI (43.64%), Boston-Cambridge-Quincy, MA (41.57%), and Indianapolis-Carmel, IN (37.26%). As of the first quarter 2012 it takes on average 306 days from the time a property goes into the foreclosure process until it is sold as a Short Sale.

Will 2012 be the Year of the Short Sale? is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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A paper prepared for the Atlanta Fed Conference, A Birds Eye View of OECD Housing Markets by Christophe Andre compares 27 world housing markets over time and notes some similarities between the price-to-income and rent-to-income ratios for the United States compared to other economies.

In the U.S. the divergence between home affordability and rental affordability is very apparent.  It is generally cheaper to buy than to rent in the U.S., even though both became more affordable since the housing price decline began in 2006.  Prices and rents are still in decline relative to income according to Andre’s chart.  In looking at the rent and own affordability in Japan it shows that both have been in decline since the 1990s.  The problems of price decline have become endemic.

Andre speculates that the same kind of systemic decline may be in play in the U.S. especially since the housing market and the normal business cycle have become decoupled as a result of the unusually long price upsurge in the early 2000s.  Historically, the housing and economic cycles have followed the same pattern over an average 6 year cycle.  When the housing boom lasted 12 years it broke the relationship and conceivably may not get in synch again.  That means that just because the economy begins to pick up does not mean that the housing market will follow suit.  People may decide to continue being renters, or may be forced to because of tight credit.

Housing May be in Chronic Down Cycle Like Japan is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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A new Treasury Department report indicates that through February the HAMP program had started loan modifications for 63% of all eligible second mortgages. Servicers started 71,133 second-lien modifications of the 113,774 eligible loans. More than 15,600 of them have been fully forgiven.

Of the $29.9 billion allocated for HAMP, roughly $2.7 billion is set aside for modifying second liens, according to the Special Inspector General for the Troubled Asset Relief Program.  In January, the Treasury boosted incentives to investors who allow the workouts, doubling the pay from earlier in the program.

In order for a loan to be eligible for the second-lien program under HAMP, the servicer must determine that a permanent first lien modification has been approved.  According to the Treasury Dept. about 315,000 HAMP first-lien loan modifications have been matched to a second, but many are deemed ineligible because of a redefault on the first lien, an extinguishment before it entered HAMP.

HAMP Working on 63% of Eligible Second Mortgages is a post from: REWealthCoach.com, Bob Massey's site for real estate investment news, information, tips, videos and podcasts. Visit today! All material is copyright © 2010 Foundation Publishing, LLC.

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